Zinc Prices Trended Higher amid Soaring Prices of Overseas Energy

SHANGHAI, Dec 27 (SMM) – The suspension of economic agenda of Joe Biden drag down US stocks at the beginning of last week and the interest rate hikes in many overseas countries triggered the market worries about the economic downturn. Under this background, the bulls took profit and left the market.

LME zinc fell to a low of $3,316/mt last week. Natural gas and electricity prices have both risen due to the European energy crisis on December 21, pushing higher the costs of smelters and intensifying the market concerns about the supply. At the same time, the final GDP value of the UK in Q3 was in line with expectations, and the US consumer confidence index in December exceeded expectations. As such, LME zinc rose to a high of $3,557/mt last week. The market sentiment eased in the second half of last week, but LME zinc fluctuated at high levels. LME zinc closed at $3,519/mt, up $138.5/mt or 4.1%, with open interest increasing by 600 lots to 247,000 lots.

SHFE zinc trended higher and stood firm due to overseas energy crisis and rising LME zinc. Domestic consumption entered the off-season early last week, and the decline of social stocks slowed, pushing down SHFE zinc, coupled with the bearish macro front. The electricity and natural gas prices in Europe soared on December 21 as the energy shortage intensified, boosting zinc prices. SHFE zinc followed suit and rose to a high of 24,545 yuan/mt. The market sentiment eased slightly on December 24 and SHFE zinc fell slightly, but the prices were still above 24,000 yuan/mt. SHFE zinc closed at 24,320 yuan/mt, up 130 yuan/mt or 0.54% on the week, with open interest increasing by 31,715 lots to 108,000 lots.